Canadian oil sands camps evacuated as wildfire shifts north

Forest fires in Northern Alberta have forced additional worker evacuations at several major Canadian oil sands operations. (Image courtesy of Robert Murray | Inspired Reporters).

About 4,000 people who work at Canada’s oil sands industry have been evacuated as a resurgent wildfire moving north of Fort McMurray is threatening several operations in the area, the heart of the country’s crude sector.

The massive wildfire, which destroyed whole sections of the town earlier this month, moved close to nearly 20 camps and facilities late Monday, including major sites operated by Suncor Energy (TSX:SU) and its Syncrude subsidiary, Reuters reports.

The sudden shift of the fire’s direction could prolong an outage that has helped to disrupt global oil supplies and prices. Crude touched a six-month high on Tuesday and is currently trading at around $48 per barrel. This marks a major rebound from mid-February, when oil prices were just above $26 a barrel, the lowest level seen since 2003.

Economic impacts

The current fire is the latest blow to a community already hit by slumping oil prices that have forced producers to halt projects and lay off hundreds.

Production outages will have a “minimal” impact on the country's economic growth, shows a report by the Conference Board of Canada.

About a million barrels per day of oil sands crude production has been shut down as a precaution and because of disruptions to regional pipelines. Much of that production remains offline.

But according to the Conference Board of Canada, such outages will have a “minimal” impact on the country’s economic growth. In a report released Tuesday, the Ottawa-based think tank said the while May production will be hit, the industry will likely make up that lost output next month, assuming operations resume.

The board based its findings on an estimated oil-production loss of about 1.2 million barrels a day over a two-week period and its report was produced before the latest evacuations.

“The true cost of this tragedy is the effect on people’s lives and livelihoods, the loss of homes and personal items,” Pedro Antunes, deputy chief economist at the Conference Board of Canada said in a statement.

Suncor Energy (TSE, NYSE:SU), which has shut in production of 300,000 barrels of oil a day at two mines and a pair of oil sands well sites, is relocating workers in the area to camps farther north that aren’t part of this week’s evacuation order.

Pipeline company Enbridge (TSE, NYSE:ENB) said it would widen a firebreak and continue to spray down equipment at its Cheecham oil storage terminal, a facility located about 43 miles southeast of Fort McMurray.

TransAlta Corp's Poplar Creek cogeneration power plant, which provides power to Suncor, was also shut by early Tuesday due to the wildfire, according to the provincial electric system operator.